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How Planet Fitness Punched Above It’s Weight

This is the story of how a born-and-bred New Yorker bootstrapped South Africa’s fastest growing fitness chain. From one small, old-school gym in Benoni to owning the club that Barack Obama works out at when he visits SA, Rivera has built a business worth over R2 billion from nothing.

Nadine Todd

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Vital Stats

  • Player: Manny Rivera
  • Company: Planet Fitness
  • Launched: 1995
  • Turnover: R850 million (2016)
  • Company Value: Between R2 billion and R3 billion
  • Number of Clubs: Planet Fitness (24); JustGyms (12)
  • Visit: planetfitness.co.za; www.justgym.co.za

When Manny Rivera launched Planet Fitness 20 years ago, he was fresh from New York, having married a South African girl. He was in his early 20s, had no credit record, no assets and no money. And he had one goal: To take on the Health & Racquet Club to become the biggest health and fitness brand in the country.

“We’re going into competition with the Health & Racquet Club.” That’s what I told people — with a completely straight face.

It was 1995 and I’d been consulting for Sports Connection who were involved in the launch of a new chain of health clubs called the Health & Racquet Club, across South Africa. There was very little competition to the brand they were planning, and instead of seeing this as a deterrent, I saw it as an opportunity. There’s always room for competition. They had arrogance, backing and cash, but I knew they’d also underestimate the little guy, which was what I was. I had no backing, no cash, no major corporate infrastructure behind me. But that was my power as well. They wouldn’t be paying any attention to me, because I was too small to matter.

And so in my mind, I was going into competition with them. I wasn’t planning one independent gym. I was going to launch a major fitness brand. I was just going to start a little bit smaller than the Health & Racquet Club, that’s all.

Related: Entrepreneur BB Moloi’s Inspiring Story of Rise To Success Through Grit And Hard Work

“When I started telling people that we were going into competition with the Health & Racquet Club, they laughed at me. They thought I was smoking my socks, and it really upset me. In my mind I believed it. I was taking them head on. I had pure blind passion, and only the end in mind. That’s what I focused on. I had a clear vision: I wanted to be the most profitable and successful health club in South Africa… and beyond.

The first challenge was that I was missing three crucial elements: Skills, credibility and a market. But I believed in this industry, and I knew there was a solution.

“The trick is to focus on what you do have, rather than what you don’t have. I had no credit record, no surety, and no one would lend me cash. No landlord would even sign a lease with me. But I was lean and mean versus a fat cat, and that would work in my favour. I needed to trade to pay the bills, so I figured out the fastest way to start trading. It was also necessary to start trading to solve my other three issues. I could acquire skills, build a market and grow my credibility once I started trading.”

Buying a club in Benoni

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At the time, my six-month contract with Sports Connection had come to an end, and although I had decided to launch my own business, the Sharper Image team had been in contact, offering me a job. I was tempted. I had a dream, but so far there’d just been obstacles, and my resolve was wavering. My wife put a stop to it. She told me I was built to be an entrepreneur, and to get out there and make it happen.

It was the kick in the pants I needed. Sharper Image had told me about the great club they had in Benoni. I’d only recently moved to South Africa from New York and didn’t know the landscape very well yet, so I focused on an area that seemed to do well.

I found a stand-alone club with nice, old school equipment and started negotiating with the owner. I couldn’t get a loan to buy the business, so I needed to make him an attractive offer that suited both our needs. My offer was simple. I’d pay him R50 000 a month (slightly more than what he said his turnover was; I’d later find out he padded this quite a bit), with a 10% escalation per year for the next ten years. We’d handle all the operating costs, and he could sit with his feet up, earning more than he was while running the gym, and at the end of the ten year period the gym would be mine.

We needed to grow our client base to make it work, but I had my club. My foot was finally in the door. That first gym gave me the skills and credibility I needed to get a meeting with Sanlam Properties. I needed R2 million to build a second club in Springs, so it was an important meeting for me.

I was keeping things lean, so my car was a tiny little Ford Bantam bakkie with no aircon. In summer this meant I drove around with a towel and spare shirt. The day of my meeting I arrived, towelled off, swopped shirts and walked into their boardroom.

There were 12 people around the boardroom table and as I started telling them my story they said, “We know who you are. You’re the guy who’s been telling everyone you’re taking on Health & Racquet Club.”

I realised in that moment that sometimes the little guy does get the attention. It might be incredulous, eye-rolling attention, but they knew who I was. I had one small club in Benoni — but I also had a story.

Related: NicHarry’s R100 Million Business Plan

I’d chosen Springs for our next location because I could build a club with only R2 million. I needed Sanlam Properties to assist with the building; we would kit the club from the Benoni club’s profits.

I promised them a good return and they agreed to the deal. After that, striking a third deal to build a club in Centurion was slightly easier. I was starting to show a track record. I was no longer a risky investment.

By this time Health & Racquet Club had gone under, and Nelson Mandela had asked the Virgin Group to save the business and launch a gym brand in South Africa. It meant there were a lot of bad feelings within the financial community towards our industry. It wasn’t fair, every industry evolves, and today South Africa has some of the most sophisticated health clubs in the world. But that was the reality at the time.

It also meant that the Goliath I had been determined to take on as an equal competitor had disappeared. But I was there, and I was growing, slowly but surely. I lived in Sandton and had clubs in Springs, Benoni and Centurion, so I spent a lot of time in my little Bantam bakkie. I’ve always believed that you need to be in your gyms. The pillars of this business are members and staff — that’s the core. If you lose that, you’re done, which is why I made sure that I visited each club daily. I needed to see the machines, equipment, members working out, touch base with the staff. You can’t lose sight of what’s happening on the ground.

Because of this, our head office has always been within one of our own properties. I don’t believe head office should ever be away from the heart of the business.

From 3 clubs to 36

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At the time we were opening the third club, Vitality launched and concluded a big deal with Virgin. I knew it was important to do a partnership deal with them. Virgin had, and this would kill my business.

I sent a long letter to Discovery and kept pestering them until they eventually met with me. I’m pretty sure they found me amusing. I had three clubs. Who the hell was I to complain about how uncompetitive it was if Virgin had a deal with Vitality and I didn’t?

But they invited me to a meeting. I think they wanted to meet this upstart. I was 32. I was a cheeky dude forcing the issue with my three clubs. Somehow, the fact that I was still determined to take on the big guys won them over. My line had changed to, “We’re in competition with Virgin,” but the vision was the same. They believed in my vision, and I got Vitality on board. It was a game-changer. We’d spent five years really focusing on building credibility; it was finally paying off.

Doing this deal had a massive impact on our business. We now have partnerships with Discovery Vitality, Momentum Multiply and Sanlam Reality. To this day, medical aid members are a big income earner, as it drives a lot of feet into our business and subsidises the deals we do with members.

Our early revenue model was based on upfront cash memberships. Members paid upfront for two or three year contracts. The benefit for them was that they could pay now and not have to worry about monthly debit orders, and it worked out at a discounted monthly rate because of the upfront payment. For us, it meant we weren’t reliant on annuity income, and it gave us the upfront cash we needed to self-fund our growth.

Related: 9 Answers You Need About Yourself Before Starting Your Own Business

The market has changed and no longer accepts this model — clients want monthly debit orders — but at the time it was a vital component of our growth strategy. Our perseverance, trading in cash and not having a bloated head office separate from our clubs meant we were able to work towards our growth goals without taking on too much debt — partly because we couldn’t get loans to begin with anyway.

This strategy helped us open additional clubs, but it gave us the 50% upfront cash we needed to build our first mega club in the northern suburbs. The old swimming pool area in Wanderers was for sale and it was the ideal position for us.

We approached New Property Ventures to go into the property side of the club as equal partners. We’d worked well with them on another deal in Cape Town and knew it would be a good fit.

Up until this point, we’d built our clubs on properties we needed to purchase ourselves (Wanderers included). The big shopping centre development companies didn’t see us as a big draw card. The megaclub in Wanderers changed that. Suddenly the market, banks and landlords started taking notice.

We were viewed as a premium anchor tenant. We brought feet to shopping centres and started receiving similar deals to our competitors. The support of the property industry gave us the momentum we needed to start aggressively growing our brand, and the banks were willing to lend us cash. Expansion started happening quickly and successfully once we hit this tipping point. We opened four clubs in the first six years, and then started opening five or six per year.

Hitting a wall and making changes

We had reached ‘serious business’ status. We were a proper competitor, we could access asset funding, and landlords in prime developments were contacting us to build clubs at their centres. It seemed like we were flying, and then things started coming undone.

I think there’s always a danger when you’re in an unprecedented growth phase that you take your eye off the ball. Things can go too well, and you lose sight of the fundamentals. This happened to us, but it was compounded by other factors. My wife was fighting cancer, and I had stepped away from the day-to-day of the business to support her, leaving an executive team to run things. The Lehman Brothers economic crisis made us realise we really needed to get back to our roots and core values.

When things start going wrong, you can see it as a disaster, or as a gift. I believe everything that happened was a good thing. We had become complacent. Looking back I can see we were making money in spite of ourselves. We’d forgotten what it was like to be a lean and hungry start-up and we needed to streamline our operations, have strong fiscal management and remain true to our values.

We’ve always viewed people as the backbone of this business, from our members to our people. We refocused our commitment to our employees and the Planet Fitness culture, and took stock of our members’ needs. We adjusted our revenue model to a debit order system. Our upfront payment model had worked well in the past, but expectations and needs had changed, and we needed to change with them. You cannot lose sight of your market.

Another clear need had presented itself as well: We recognised that a new wealth platform had developed in South Africa, and that we could cater to this market with a product slightly different to our traditional offering at a great price point. JustGym brings the fun back into the business with an offering anyone can afford, and opens us up to consumers who haven’t traditionally been gym goers, but who were looking for an
entry point.

The recession was challenging for all businesses across all industries, but the focus it brought us has had incredible results. We’re opening a club a month for the next five years, with a R500 million investment earmarked for 2017 into Planet Fitness and JustGym.

There are always growth opportunities available, if you pay attention to the market, and stay true to your core values.

Nadine Todd is the Managing Editor of Entrepreneur Magazine, the How-To guide for growing businesses. Find her on Google+.

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Going The Extra Mile With Neil Robinson Of Relate Bracelets

In business, your offering is only as good as your relationships. Neil Robinson from Relate Bracelets explains how FedEx Express has helped the business grow into Africa and beyond.

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Vital stats

  • Who? Neil Robinson
  • Company: Relate Bracelets
  • Position: Managing Director
  • Visit: relate.org.za

Neil Robinson, MD of Relate Bracelets understands the importance of business relationships. While Relate is a non-profit organisation, it is run like a business. It does not rely on donors, but instead produces and sells a product.

For each bracelet sold, one third of the income goes towards the materials and operating costs, one third supports the people who produce the bracelets, and one third goes to the charity for which that particular bracelet is branded.

In order for the business model to work and be sustainable, Relate’s partners are incredibly important. These include the retail chains that stock the product and who provide prime point-of-sale positioning, the charities who Relate works with, and most importantly, Relate’s logistics service provider, FedEx Express.

“Retail is all about visibility and availability,” explains Neil. “A brand is a living, breathing thing. People can see it, use it, and comment on it, but if they can’t access it, it’s all for naught. And so, at the point of purchase, it’s both visible and available, or it’s not.

“Logistics is key. You need to get your product to the retailer on time, 100% of the time. The expertise and focus that FedEx displays in supply chain and logistics encompasses far more than just retail, they understand our specific needs, making them a strategic partner, rather than merely a supplier.”

Related: Zenzele Fitness’s Clever Tactics To Grow In Next To No Time

Building a relationship

The FedEx/Relate Bracelets relationship stretches back to 2009, when Relate Bracelets launched its first campaign with ‘Unite Against Malaria’ leading up to the 2010 FIFA World Cup.

“We did the first campaign in partnership with Nando’s,” says Neil. “Robbie Brozin was passionate about the cause, and he pulled in strategic partners to launch the campaign. Within two years we’d shipped hundreds of thousands of bracelets. FedEx was an incredible partner, ensuring the integrity of our product and time-sensitive deliveries, and we’ve worked with them ever since.”

As with all good B2B relationships, the FedEx and Relate Bracelets teams understand that regular strategy sessions and updates are important.

“FedEx understands the inner workings of our business,” says Neil.

“A successful campaign has multiple elements, from planning and strategy, to marketing support, pricing and distribution planning. Of these, distribution planning is the most critical. For us, the bridge between our brand and the consumer is logistics. FedEx have delivered beyond expectations. They literally and figuratively go the extra mile for us.”

Protecting a brand

FedEx has customers across different industries and each of their needs are different. In the case of Relate, who operate in the retail sector, buying patterns are important. “Retailers run a tight ship,” explains Neil.

“They have planning cycles and seasons. Besides the fact that penalty clauses are built into contracts, you can’t miss a deadline by two days, or you’re in the next cycle, and that might be two weeks later. Not only are you missing out on valuable shelf time, but this can affect an entire campaign. Lost sales can also influence the retailers’ buying decision the following season. FedEx has made it their business to understand our business, so they know what’s at stake and what’s important to us.”

Supporting growth

FedEx has also played an integral role in the overall expansion of Relate Bracelets, particularly into new markets. “As a global organisation, FedEx has been absolutely critical in supporting us to grow our business into Africa, the US, Australia, the UK, Western Europe, and now New Zealand. They play an enormous role in the delivery of our products, with sophisticated tracking systems ensuring that the quality and integrity of our products are maintained.”

Through the relationship with FedEx, Relate experiences the benefits of working with a globally recognised and credible brand. “When you work with quality, you get quality.”

Related: Entrepreneur BB Moloi’s Inspiring Story of Rise To Success Through Grit And Hard Work

The business

If you’ve ever bought a beaded bracelet that supports a cause (for example: United Against Malaria, Operation Smile SA or PinkDrive), chances are it was a Relate Bracelet. If you bought it at Woolworths, Clicks, Sorbet or Foschini, it most definitely was.

To date, Relate Bracelets has raised more than R40 million, which supports various charities and ‘gogos’, women living on government grants and supporting their grandchildren, and who desperately need the additional income Relate Bracelets provides.

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Entrepreneur Profiles

Slikour’s Moto: If You Dream It, You Can Be It

Rapper and entrepreneur Slikour believes his success is the result of one key element: The aspiration to make something of himself, and create a platform for his voice to be heard. Now he’s bringing that mindset to South Africa’s black urban youth.

Nadine Todd

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VITAL STATS

Take note

Before you can achieve great success, you have to believe in the possibility of success. This is the single greatest secret to changing your circumstances — you have to believe it’s possible.

Did music or entrepreneurship come first? Siya Metane, aka rapper Slikour, isn’t sure himself. The two have worked hand in hand for him since he started selling cassette tapes of his own music when he was 12 years old.

What has developed over time however, is an innate and deep understanding that with his success comes a responsibility to pay it forward, and help his community and kids like him see that they can be anything they put their minds to.

Related: 10 SA Entrepreneurs Who Built Their Businesses From Nothing

If they can dream it, they can be it — provided they realise they can dream it in the first place. This is his challenge, and greatest driving force.

Start small, but dream big

I bought cassette tapes on Smal Street in the CBD for R5. My best friend, Lebo and I recorded our own rap music onto them and sold them in our neighbourhood for R15. We needed the mark-up — it meant we could buy more tapes, and also that we were making a profit.

Related: Zuko Tisani Learnt These 7 Invaluable Lessons On His Path To Success

I’m not sure if we were trying to start a business or launch our rap careers, but if you’re living in a hood like Leondale you don’t always recognise that there are opportunities open to you. No one is going to do it for you — you have to have your own aspirations, and find a way to make them happen.

Keep dreaming big, no matter what

That was one of the biggest and earliest lessons I recall growing up: The ability to dream big can be stifled out of you. I lived in a hood where there were no aspirations past our neighbourhood — the neighbourhood and its opportunities were everything. If 90% of the people you know are suffering, who are you to not suffer?

It’s a very limiting mindset, and one that does a lot of damage to our youth. I knew kids who had incredible potential, but could only look at their immediate environments for opportunities. So a budding young scientist doesn’t find a way to change the world — he finds a new way to make drugs.

Those are the limiting aspirations I was surrounded by. I call it the Trap, and it’s the driving force behind everything I do today. I want South Africa’s urban youth to recognise the Trap, and understand that they should have aspirations beyond it, because they have the abilities and potential necessary to break free.

Work hard, be determined and believe in yourself

I was lucky, I wasn’t a victim of the Trap. What so many people don’t understand is that I could have been. Hard work, drive and discipline aren’t enough to break free of the Trap. You need to believe you can break free — to look beyond your current circumstances. In my experience, that seemingly simple mindset shift is the biggest hurdle to overcome. It’s more complicated and pervasive than you can imagine.

Two things showed me a different way. First, my mom got me bursaries at Holy Rosary Convent and then St Benedict’s College. I was surrounded by rich white kids, full of privilege, and it struck me that here were the same talents and opportunities, but with a wealth of aspiration in the mix.

Related: Self-Made Millionaire At 24 Marnus Broodryk On How To Build A R1 Billion Business

That was the real difference — not ability, but recognising that ability and having the aspiration to do something with it. It was eye-opening. The second was meeting my best friend, Lebo Mothibe. Lebo, or Shugasmakx, as he’d later be known in the music world, had one foot in the privileged world, and one foot in our world.

His mom lived in the hood, his dad was a wealthy entrepreneur who lived in Illovo. And Lebo straddled both worlds effortlessly, and with humility. But he looked beyond the limiting beliefs held by many of his neighbourhood peers.

Find people to inspire you to reach success

His dad was also the first self-made, wealthy black man I met. But when I heard his story, I realised that it wasn’t overnight success. He’d slept on Lebo’s mom’s couch while he slowly but steadily built his business. It gave me an understanding that success is earned. You need to work at it, and push on against adversity. This had a huge impact on me.

Lebo was the ying to my yang. Even though we didn’t think of each other as business partners, that’s what we were, from the age of 12. We formed Skwatta Kamp, we hustled and shook up the music industry together, and changed the face of rap music in South Africa.

I was the dreamer, the visionary, and Lebo was the executor. He found a way to make my crazy schemes and ideas come to life. This is exactly what a partnership should be — helping each other grow, and complementing diverse skill sets.

Build your success, one step at a time

We built our success, brick by brick. I entered a TV show competition, Jam Alley, and won. I used the cash and Dions vouchers to buy recording equipment. Lebo’s dad helped with speakers and a keyboard. My brother, who was studying IT, downloaded software and helped us with our recording quality. Everyone pitched in with what they could. 

Be your own biggest cheerleader

We tried the recording contract route for a while, but realised that the only people who cared about our success were us. And so we hit the streets — hard. We had street crews, we sold our own CDs and negotiated with music stores to carry our albums.

Recording studios kept saying they’d sign us, but they never had a studio available. They just didn’t see the value in rap and hip hop. They didn’t believe there was money in it in South Africa. We needed to prove there was.

Gallo finally approached us and signed us after we won at the South African Music Awards (SAMAs) as an independent act. We used real guerrilla tactics to get our name out there — on stage, with that platform, we told our fans that if a music store didn’t carry our album, to burn it down. We wanted the attention — that’s how you build a name.

Related: Entrepreneurial Powerhouse TBO Touch On How Success Is Built From Small Acts

Our first album went gold, and we used that to push the idea of rap into mainstream media. If 20 000 people bought the album, another 200 000 had bootlegged it. There was money here; and slowly brands and advertisers started realising we were right.

Drive a movement with your business

We were musicians, but first and foremost we were driving a movement, and that meant we needed to be businessmen as well. We hosted end of year parties, and got brands on board, realising we had a captive audience that aligned with their target market demographics. We started our own label, Buttabing Entertainment.

Our goal was to find and nurture young musicians from the hood to get them established in the industry, and show other kids in the Trap that it could be done: Anyone can create their own destiny. One of the things I’m proudest of is discovering a kid in Katlehong, Senzo Mfundo Vilakazi, who would develop into Kwesta.

He’s doing phenomenally well, and recently appeared on Sway in the Morning, one of the biggest hip hop shows in the US. Our success spilt over into Kwesta, and now his meteoric rise will hopefully inspire a whole new generation to dream bigger than they ever thought possible.

Pivoting to further growth

All success has its pinnacle. By 2010 we had achieved so much as Skwatta Kamp. We’d brought rap music into the mainstream and opened opportunities for countless kids, as music labels actively sought rap and hip hop acts. I realised that I’d hit a ceiling. I needed to step back, regroup and figure out what to do next.

What I did was something I’ve only ever associated with privilege. I moved home, spent a lot of time lying on the couch, and wrote. I wrote my life, my lessons, my dreams, my ideas. I don’t know how I reached a point where I was able to do that, but I’m grateful. I started collecting my thoughts and understanding my purpose.

During that time I was approached to join a few marketing agencies. I had no formal marketing training, but we’d worked with big brands at our parties and activations.

Sprite was the first to recognise that they had an opportunity to authentically connect with the black urban youth through us, and so we partnered up. I learnt above-the-line marketing in a Coca-Cola boardroom, and built onto what we’d learnt on the streets about below-the-line marketing.

Take a step back, and rediscover your purpose

That experience had drawn attention, and so for a while I joined an agency. But its mandate was sponsorships, and my heart was with the black urban youth. I’d discovered my purpose, even if I’d subconsciously been living that purpose for almost 20 years.

I wanted to create a platform that gives young black artists a voice; established artists a way to reach out to the youth that other platforms don’t offer; and brands a way to authentically connect with that audience — not just to sell products, but to show black urban youth that their culture is important, that it holds value, and that they, in turn, hold value.

Related: Shark Tank’s Romeo Kumalo Weighs In On High-Impact Entrepreneurial Businesses

Adidas’s support of Run DMC in the US showed that kids from the ghetto had a message worth listening to. Big brands have the power to connect the unheard and voiceless to the mainstream, if it’s done correctly. I had the marketing experience to understand the ROI that brands need, as well as what I could do with that to support black urban youth.

All I had were dreams and a URL, but that was enough. I quit my job and launched my website, Slikouronlife.

Reveal opportunities and create aspirations with your message

This is my politics and CSI. If we can get marketing to marry culture, and change the positioning and perception of young black South Africans, we can show there are opportunities out there, and create aspirations.

But we need to put culture first and tap into the authenticity of who we are as South Africans. We need to recognise and acknowledge the mental traps that exist in our neighbourhoods, and that we are victims of limiting beliefs, and then show that there is another way.

Everyone told me I was nuts. That black people don’t go online. I did it anyway. With Skwatta Kamp we had created a market for our music. Kids supported us; my name added value — and then brands came on board. We now average between 200 000 and 250 000 unique visitors a month, which is impressive for a mainstream website, let alone a niche music site.

Ten months ago we were a team of three operating from my house with one desk. Today we’re a team of ten with one focus: To make a real difference on the ground. To give the voiceless a voice. To prove that if we can drive the aspirations of South Africa’s urban youth, the sky will be the limit.


Related: Watch List: 50 Top SA Small Businesses To Watch

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Entrepreneur Profiles

Edward Moshole Founder Of Chem-Fresh Started With R68 And Turned It Into A R25 Million Business

Edward Moshole started a business in 1999 with just R68 in his pocket. Today he has a company that not only has a turnover upwards of R25 million, but is also on the cusp of expanding to the next level. Here’s how he’s turning clients into partners.

GG van Rooyen

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Vital Stats

In 1999, Edward Moshole was a cleaner with just R68 in his pocket, but he noticed a business opportunity.

Good quality detergents and disinfectants could make a tough cleaning job much easier, so he started buying quality products in bulk and selling them to his fellow cleaners. He wasn’t satisfied, though. He wanted a business that made and sold its own products. So, he tackled the long and arduous process of creating cleaners and detergents that could pass strict regulations and compete with the best products on the market.

It wasn’t easy, but he kept at it. In fact, he only got his first real breakthrough in 2006 when a supermarket agreed to start stocking his products. Today, his Chem-Fresh products can be found all over Africa, and he counts Pick n Pay as one of his main clients. How did Moshole manage to turn R68 into an empire?

Here are his rules for building a large and sustainable operation.

1. Find the right clients

“Very early on, I identified Pick n Pay as a must-have client. I could see that the company was changing its strategy — it was starting to move into townships and rural areas, places where it hadn’t been operating until then — and I thought it would be the perfect place to sell Chem-Fresh products,” says Moshole. But getting in wasn’t easy.

“As a small business, you don’t get to sit down with decision- makers. Becoming a supplier to a large retailer is a difficult process. It took me years to get a foot in the door, but I didn’t give up. I just knew that Pick n Pay was the right company to do business with, so I kept at it.

I refused to take no for an answer. Today, Pick n Pay operates more like a partner than a client.

Related: Attention Black Entrepreneurs: Start-Up Funding From Government Grants & Funds

Thanks to my partnership with Pick n Pay, I’ve been able to scale Chem-Fresh quickly and access a distribution channel that allows Chem-Fresh products to be sold all over the continent. Once you have the right clients, you gain instant clout and reliability.”

2. Own the manufacturing process

chem-fresh-products

PC: risingafrica.org

When starting out, entrepreneurs often have little choice but to buy other companies’ products and resell them. It’s not necessarily a bad thing — it can be a successful strategy. However, it can eventually limit your growth.

Firstly, buying and reselling products places a cap on your margins. When you own the manufacturing process, you can increase your margins, since making and selling products tends to offer wider margins than merely buying and reselling.

That said, you have to keep in mind that this is only true when you operate at a certain scale. Making and selling something in small quantities can often be more expensive and time consuming than simply buying it from a supplier. You need to crunch the numbers and make sure that the expense of a manufacturing facility is actually worth it in the long run.

Secondly, it allows you to keep control of the quality of your product. “The secret to any great brand is consistency,” says Moshole.

“People should know what they can expect from the brand, and one of the best ways to ensure this is to have total control of your product. If you make it yourself, you’re in charge of the quality.”

3. Be willing to diversify

Some companies can grow while sticking to a very specific niche, but most have no other option but to diversify. Although Chem-Fresh started out selling just one or two products, Moshole soon started to expand the range. The company now has more than 100 products.

“Generally speaking, you can only capture so much of a market. Sometimes it makes sense to actively try to grow your market share, but it’s also a good idea to diversify. Not only does this open more revenue streams, but it also protects the business against market changes. So, if the sales of one product slows down, another speeds up and everything evens out,” says Moshole.

Related: Sibongiseni Mbatha’s Top Collaboration Techniques To Grow Your Business

But the important thing is not to stray too far from your comfort zone. Chem-Fresh now has a large product range, but it has stuck to an industry that it is knowledgeable about. The company has built a name for itself within a specific industry.

4. Build a strong foundation

“Don’t wait too long to start thinking about the long-term life of your business,” advises Moshole. “The stronger the foundation of the business, the easier it is to grow it, so you need to implement the right systems and processes early on. If you don’t, the business will fall apart without you.

“You will always be very involved at an operational level. You’ll be so busy with the daily grind, that you’ll never be able to take a strategic view and focus on building the company.

So, you need the right systems and the right people. You need to know that the business can keep going without you. If you do this, you will be able to grow the company while others deal with the operational demands.”


Key Insights

There’s no substitute for perseverance

It took Edward years to get his product onto Pick n Pay’s shelves, but he wouldn’t take no for an answer. Today, the relationship is more like a partnership.

Own the process

In the right quantities, producing and selling your own product can significantly increase your margins over selling someone else’s products.

Strategically increase revenue streams

Diversifying your product range within your niche allows you to offer the same clients a greater range, tap into new markets, and protect the business against market changes.


TAKE NOTE

Take a long-term view when contemplating the growth of your company. It’s never too soon to prepare a business for growth. Implementing the right systems and processes right now can make it much easier to scale the operation down the line.


Related: 6 Of The Most Profitable Small Businesses In South Africa

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